Income Planning

 

Income planning is the process of matching your current and futures financial resources to the appropriate investment, insurance and or savings vehicles to provide an specified income for a period of time, a lifetime or generations.

 

We suggest the following process.

Step 1 - Review all available options before you read any material provided by a specific bank, investments company or broker.

  • Bank products for income; CD’s, Interest-bearing Checking, Money Market and Savings
  • Credit Union products for income; Interest-bearing Checking, Money Market, Share Certificates (credit Unions alternative to CD’s) and Savings
  • Insurance based products for income; Fixed Annuities with multi-year interest guarantees (Insurance companies alternative to CD’s), Fixed Annuities with Guaranteed Minimum Income benefits, Interest-bearing Checking, Immediate Income Annuities
  • Regulated Securities products for income; Bonds; Corporate, Federal and Municipal, Certificates of Deposit; Stocks with a declared dividend, Bonds; Corporate, Federal and Municipal, REIT’s, Variable Annuities with Guaranteed Minimum Income or accumulation benefits
  • Non-Regulated Securities, Stock in a closely held corporation, Closely held mortgages
  • Income yielding real estate, Residential or commercial rentals
  • Systematic liquidation of assets, converting real estate or precious metals to cash on a periodic basis

Step 2- Research and Compare Options for risks and guarantees (specific securities or CD's) side by side to see which are best suited to your needs specifically

  • Bank products for income; CD’s, Interest-bearing Checking, Money Market and Savings
  • Credit Union products for income; Interest-bearing Checking, Money Market, Share Certificates (credit Unions alternative to CD’s) and Savings
  • Insurance based products for income; Fixed Annuities with multi-year interest guarantees (Insurance companies alternative to CD’s), Fixed Annuities with Guaranteed Minimum Income benefits, Interest-bearing Checking, Immediate Income Annuities
  • Regulated Securities products for income; Bonds; Corporate, Federal and Municipal, Certificates of Deposit; Stocks with a declared dividend, Bonds; Corporate, Federal and Municipal, REIT’s, Variable Annuities with Guaranteed Minimum Income or accumulation benefits
  • Non-Regulated Securities, Stock in a closely held corporation, Closely held mortgages
  • Income yielding real estate, residential or commercial rentals
  • Systematic liquidation of assets, converting real estate or precious metals to cash on a periodic basis

Step 3 - Narrow down the options to one or two, now you need to research the plans offered within the options:

    • If you selected bank or credit union products as a viable option;
        • When can you begin to receive income
        • Is there a penalty or fee for receiving income
        • Can the income be direct deposited
    • As for insurance based products, look at the following features;
      • Fixed Annuities with a multi-year interest guarantee
        • When can you begin to receive income
        • Is there a penalty or fee for receiving income
        • Can the income be direct deposited
      • Fixed Annuities with a Lifetime guaranteed income benefit
        • When can you begin to receive income
        • Is the principal available for emergencies
        • What are the spousal considerations at death or incapacity
      • Immediate Annuities
        • What are the payout options
        • Is the principal available for emergencies
        • What are the spousal considerations at death or incapacity
    • Regulated Securities are purchased via tradition brokerage firms and can offer the most potential for growth while offering no protection of principal and highest degree of volatility
        • Bonds are actually one of the most popular vehicles used for income; Many bonds offer additional safety and tax considerations favorable for income.
        • Stocks can offer dividends that can be used for income. While neither the principal amount, the amount of the dividend or the existence of the dividend are guaranteed.
        • Real Estate Investment Trusts usually offer dividends that can be used for income. Consider neither the principal amount, the amount of the dividend or the existence of the dividend are guaranteed.
        • Variable Annuities with Guaranteed Minimum Income or accumulation benefits offer exposure directly to mutually held securities (Mutual Fund/sub accounts). the guarantee offer an income for life or a period of time that is guaranteed by the offering insurance company.  The cost of this insurance is as much as 3.6% of the principal amount held in the annuity.
    • Non-Regulated Securities have no oversight, which mean if you are dis-satisfied you need to argue your case in arbitration or the courts. That being said, these are usually closely held or family owned corporations or partnerships.
    • Real Estate has been for generations a safe bet, except during the periods of a down economy. Income from individually held real estate does require 100% risk to principal if the lessor fails to pay, the property is in need of maintenance or repair, if neighborhood by-laws change or any number of variables.
    • Precious metals are usually used for a long term accumulation vehicle.  To take profits or income, one must sell the material to a willing buyer.  Many precious metal brokers take a percentage of 1-10% to sell or buy.  This is based on their volume and the markets need for the material.